Outsourcing in the financial services industry: A study of outsourcing strategies and their effects on performance, reputation and on relationships

McTernan, David
(2015)
Outsourcing in the financial services industry: A study of outsourcing strategies and their effects on performance, reputation and on relationships.
Masters thesis, Dublin, National College of Ireland.

Abstract

The aim of this research was to conduct an in-depth review of the prevalent outsourcing strategies within the financial services industry and the benefits and challenges of each strategy. The research analyses how outsourcing effects companies’ performance, reputation and relationships and discusses whether outsourcing is beneficial to a company’s shareholders, to its staff and to the industry in the long-term.

The increasing competition and greater access to labour markets in low-cost locations has increasingly seen financial service providers outsourcing business processes and functions as a business strategy in order to reduce costs, find new efficiencies and increase shareholder value according to Fill and Visser (2000).

The research provided an overview of outsourcing practises at an industry level and addresses whether or not these practises are beneficial to those affected by it. The research has shown that the practise of outsourcing is beneficial to performance if managed correctly and has assisted companies in growing their businesses.

However, the research also shows that changes in how the industry operates has had negative effects on staff. Their team structures and individual roles are changing and there is uncertainty around the future of their positions within their companies.

The research also discusses the future of the financial services industry in Ireland with respect to outsourcing. The research emphasised the requirement for companies and individuals to adapt to changes in order to continue to have a future in the industry.

The research recommends a rough framework for how companies can implement a successful outsourcing programme. The second recommendation is for the financial services industry to review the ongoing trend of outsourcing and analyse the long-term implications to the industry. In order for Ireland to remain relevant into the future, Ireland must ensure that the infrastructure is in place to continue to support outsourcing relationships.